Islam Azzam, Chairperson of the Financial Regulatory Authority (FRA), stressed that the Authority will show no leniency towards violations of its regulatory rules governing the verification of customer data across all non-banking financial activities, particularly FRA Board Decision No. 186 of 2024 and its amendments, most recently Decision No. 133 of 2026, issued last July.
The rules require all FRA-regulated companies engaged in activities that use financial technology, as well as fintech-related outsourcing service providers, to verify customer data against national ID details and mobile phone ownership records and check whether customers are listed on money laundering or asset-freezing lists.
Under the rules, all consumer finance companies, as well as companies, associations and institutions providing financing to micro, small and medium enterprises, are required to send an OTP verification code to customers when contracts are concluded. The code must be sent to the verified mobile number associated with each customer and again when customers use the financing facility. Companies and entities must also retain records of the OTP verification process.
Azzam stressed the need for all non-banking finance providers to comply with these regulatory controls, warning that strict legal action would be taken against violators.
He explained that the regulatory framework strengthens the FRA’s supervisory capabilities and helps detect negative practices or manipulation at an early stage when individuals seek financing for consumer or productive purposes. It also helps address identity theft and the submission of inaccurate personal data, protecting individuals’ rights and preventing adverse effects on their creditworthiness, he said.
Azzam noted that the OTP verification system is already in place at entities that use financial technology, while the remaining entities are currently required to implement it, with the deadline for completing the necessary compliance arrangements set for next January.
The system will strengthen the ability of companies, associations and institutions to verify the accuracy of data submitted by individuals seeking financing, link and cross-check their personal information, and tighten identity verification procedures, Azzam said.
He stressed that the FRA will continue its efforts to safeguard the soundness and stability of non-banking financial markets and provide the highest levels of protection for their beneficiaries. The Authority will also continue developing the regulatory and supervisory frameworks governing various activities in line with market developments and advances in technology.
The FRA Chairperson recently imposed strict penalties on a consumer finance company following an incident in which data belonging to parents at an international school was exploited to obtain financing. The company was found to have violated the regulatory framework established by the FRA governing customer data verification and financing controls.
